Baird Midcap Fund Seeks The Market’s Sweet Spot

MILWAUKEE , August 23, 2010

With a 1-year return through June 30 of 26.7%, the Baird MidCap Fund (Institutional Class symbol: BMDIX) outpaced the Russell MidCap Growth Index return of 21.3% and also ranks in the top 15% of its Morningstar peer group for the trailing 1- and 3-years periods. “MidCaps are in the market’s sweet spot,” said Chuck Severson, co-portfolio manager and a 17-year mid cap stock investment veteran. “MidCap stocks represent over 20% of the market and, though past performance doesn’t guarantee future results, MidCap stocks are a compelling opportunity in that they have historically provided greater returns than large cap stocks without the risk associated with small cap companies. ”

Baird MidCap focuses on companies with market capitalizations from $1 billion to $15 billion. Severson likes medium-sized companies because they are better positioned than larger companies to capitalize on emerging growth opportunities and adjust their business strategies in response to economic cycles. Recent history shows that over most time periods, mid cap stocks have outperformed both large caps and small caps.1 “Mid Caps have the ability to deliver more alpha with higher returns and less volatility than small caps,” he said.

“MidCaps are well-enough established not to be speculative, yet are much more nimble to pursue opportunity than more well-established large cap names,” said Severson. “Mid cap companies are more likely to have effective sales, distribution and administrative systems firmly in place. Yet they are still less bureaucratic and are small enough to be agile players within their industries.”

Baird MidCap Fund also benefits from the fact that they occupy a less prominent and hence underfollowed place on the market capitalization spectrum. According to Severson, “These stocks tend to be overlooked and are underrepresented in portfolios. Fewer Wall Street analysts follow these names creating the opportunity for experienced investment professionals to uncover them.”

Baird MidCap can invest in all market sectors but focuses on high quality companies with above average earnings growth and profitability. As of June 30, 2010, Baird Mid Cap held positions in 56 companies and was well diversified across major growth sectors of the economy. According to Severson, “Our strategy is to build our portfolios with companies that can grow faster, are as profitable and are better financed than their peers. Our portfolios are currently structured with a pro-cyclical bias. We remain overweight in both information technology and industrials due to their strong fundamentals. Business spending is quite robust as companies invest in ways to improve profitability and rebuild inventories following the recession.”

About Chuck Severson, CFA Chuck Severson is Senior Portfolio Manager with Baird Investment Management and part of a mid cap growth investment team composed of five senior investment professionals, each with extensive investment experience and diverse backgrounds. Chuck has more than 23 years of investment experience and earned a Master of Science Degree in Finance in 1987 and BBA degree in 1982 from the University of Wisconsin – Madison where he was a member of the Applied Security Analysis Program. He earned the Chartered Financial Analyst designation in 1991.

About Baird FundsThe Baird Funds family offers a full range of both fixed income mutual funds managed by Baird Advisors, and equity mutual funds managed by Baird Investment Management (BIM). The seasoned investment professionals of Baird Advisors and BIM use proven, disciplined investment approaches that seek to deliver consistent, competitive returns to mutual fund shareholders. For more information, visit www.bairdfunds.com.

About BairdBaird is an employee-owned, international wealth management, capital markets, private equity and asset management firm with offices in the United States, Europe and Asia. Established in 1919, Baird has more than 2,400 associates serving the needs of individual, corporate, institutional and municipal clients. Baird oversees and manages client assets of more than $75 billion. Committed to being a great place to work, Baird ranked number 11 on FORTUNE’s “100 Best Companies to Work For” in 2010 – its seventh consecutive year on the list. Baird’s principal operating subsidiaries are Robert W. Baird & Co. in the United States and Robert W. Baird Group Ltd. in Europe. Baird also has an operating subsidiary in Asia supporting Baird’s private equity operations. For more information, please visit Baird’s Web site at www.rwbaird.com.

1PSN Enterprise and Baseline.

Information through 06/30/10The rankings cited on page one are for the institutional class of the Baird MidCap Fund in the Morningstar Mid Cap Growth category for 1 and 3 years out of 782 and 694 funds, respectively. The Fund ranked in the top 33% out of 612 funds for the 5-year period. Percentile rank is a standardized way of ranking items within a peer group, in this case, funds with the same Morningstar Category. The observation with the largest numerical value is ranked one; the observation with the smallest numerical value is ranked 100. The remaining observations are placed equal distance from one another on the rating scale. Note that lower percentile ranks are generally more favorable for returns (high returns), while higher percentile ranks are generally more favorable for risk measures (low risk).

Average Annual Total Returns as of 06/30/2010

Baird MidCap Fund

YTD as of06-30-2010

1 Yr

3 Yrs

5 Yrs

Since Inception12-29-00

Institutional Class

1.8%

26.7%

-3.6%

2.6%

2.1%

Investor Class

1.7%

26.3%

-3.9%

2.4%

1.8%

Russell MidCap® Growth Index

-3.3%

21.3%

-7.5%

1.4%

0.1%

Minimum investment for the Fund is $25,000. The gross expense ratio is 1.10%. The performance of Baird MidCap Fund is measured against the Russell Midcap® Growth Index, a mid-cap index that measures the performance of those Russell Midcap companies with higher price-to-book and higher forecasted growth values. The stocks are also member of the Russell 1000® Index. This is an unmanaged common stock index that is generally representative of the U. S. Stock market. An investment cannot be made directly in an index.

Performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment in the fund will fluctuate so that an Investor’s shares, when redeemed, may be worth more or less than their original cost. The fund’s current performance may be lower or higher than this performance data. To obtain performance data current to the most recent month end, please visit www.bairdfunds.com.

Investors should consider the investment objectives, risks, charges and expenses of each fund carefully before investing. This and other information is found in the prospectus. For a prospectus and application, contact Baird Funds directly at 800-444-9102, at www.bairdfunds.com, via e-mail, or contact your Baird Financial Advisor. Please read the prospectus carefully before investing.